Nigeria, S’Africa need $90b to bridge energy gaps for telecoms services

PWC canvasses renewable off-grid tech under Power Africa initiative
Sub-Saharan African (SSA) countries including Nigeria, South Africa, Kenya, Angola, among others might need between $60 billion and $90 billion (N17.7 trillion) yearly investments to bridge the growing energy gaps in the region for a sustainable telecommunications sector.

This major investment is expected to go into renewable energy infrastructure. Renewable energy is generally defined as energy that is collected from resources, which are naturally replenished on a human timescale, such as sunlight, wind, rain, tides, waves, and geothermal heat.

This projection formed one of the key highlights of a new renewable energy report commissioned by IHS Towers, an Africa’s telecoms infrastructure company, and conducted on Africa by the Intelligence Unit of The Economist, titled: ‘Power Up: Delivering Renewable Energy in Africa’, unveiled at the weekend, in Lagos.

Speaking at the unveiling of the report, Executive Vice Chairman and Group Chief Executive Officer, IHS, Issam Darwish said the report reaffirmed that SSA has the raw ingredients for a vibrant renewable energy market.

Darwish said the resources are in abundance, coupled with falling costs of wind turbines and solar panels, smart innovations in end-user equipment and political commitment- by governments and international donors alike.

The ‘Power Up’ report also recognises the scale of the opportunity facing the continent, from geothermal power in Kenya and Ethiopia to solar power in Zambia – and will help governments and investors to understand how to support renewable energy projects and provide the best conditions for success.

The report pointed out that the case for building renewable energy infrastructure in SSA is stronger than ever and positive experiences in lead markets such as South Africa and Kenya highlight successful strategies and best practices. “However, Africa requires up to $90 billion of investment yearly to meet its current energy shortfall.

The IHS report observed that the African renewables sector resembles the mobile phone sector of a decade ago, having the capacity to leapfrog heavy infrastructure with a larger than assumed market.

According to Darwish, “At IHS, we have seen the energy and operational efficiency benefits that come from investing in renewable power solutions, having invested $500 million in new green energy power systems across our portfolio.

“Over the next few years, we plan to become almost diesel neutral across our Zambian portfolio and we are assessing solar farm opportunities in Rwanda that could potentially supply power up the national grid in the first ‘energy swap’ model to be used in Africa.”

IHS is a major player in the African telecoms space with around 23,000 towers across Nigeria, Ivory Coast, Cameroon, Zambia and Rwanda. It has around 16,000 towers in Nigeria, its biggest market and Africa’s most populace nation.

The company recently agreed to acquire its Nigeria’s rival Helios Towers Nigeria (HTN) with 1,211 towers spread across 34 of Nigeria’s 36 states, has identified the energy gap in the continent, where its acquires high dependence on energy to power all its telecoms towers.

Consequently, the commissioning of the research by IHS was an attempt to ascertain the energy shortfall of Africa and how renewable energy could be deployed to effectively power the various sectors of the economy.

Each year, the average SSA manufacturing firm loses 5.5 per cent of annual sales due to power outages, over double the global average (2.6 per cent), according to the World Bank.

According to the report, while fossil fuels, notably coal, oil and gas, continue to provide a significant quantity of energy, renewables need to play a greater role.

Meanwhile, with about 684 million Africans currently living without electricity, the latest report from PwC has canvassed improvement in rural electrification across the continent through the adoption of new renewable off-grid technologies, in combination with innovative business models and mobile payment systems.

To meet the United Nations’ 2030 target of electricity for all, PwC, in the report tagged: ‘Electricity beyond the grid: accelerating access to sustainable power for all’, said a new approach is needed that recognises the part that off-grid technology can play.

The multinational professional services network however noted that it was high time for policymakers to get out of a top-down mindset and support the range of renewable energy off-grid technologies and new business models in the sector.

Africa Deals Power and Utility Lead, PwC, John Gibbs, said: “For the millions of people who don’t currently have access to electricity, the old assumption that they will have to wait for grid extensions is being turned on its head by new technological possibilities. 634 million people without electricity are in Africa.

“Faster progress is needed, and we believe it can be achieved if national energy policies adopt a more comprehensive approach to energy access, embracing the new starting points for energy provided by standalone renewable technology and mini-grids.”

The Senior Manager and Energy Policy and Regulation Expert, PwC, George Baecker, said: “Policymakers need to embrace the new renewable off-grid technologies and innovative business models.

“The combination of centralised top-down grid extension with decentralised demand-driven bottom-up strategies, in the form of mini grids and especially standalone solutions, will speed up the increase in electrification levels.”

With an energy transformation on the cards, Power and Utility Specialist for PwC Africa, Angeli Hoekstra pointed out that “all or nothing’ approaches that focus primarily on the national grid are increasingly out of step to what is now possible in power technology. Advances in technology are rapidly changing the options available beyond the grid.”

“Falling solar technology costs have spurred the growth of standalone home systems and are changing the economics of mini-grid systems. Battery storage technology is fast evolving to the point where it is going to play a significant role in utility-scale solar power storage and is beginning to feature in smaller-scale off-grid solutions.

“Together with access to mobile technology and mobile payment systems for microloans, a new era has arrived for beyond the grid electrification.”

The PwC report prescribed that African nations should develop an integrated energy access plan and map, so that everyone can plan with more certainty for either off-grid or grid extension solutions; and create an enabling environment for off-grid development – including clearer criteria for mini-grid development, support for skills and training and more supportive regulation to allow private players to unlock the off-grid market potential.

Besides, it stated that the economies need to recognise the value of and promote the growth of mobile infrastructure, microloans and payment solutions in supporting energy access – mobile infrastructure is proving crucial in the take-up of standalone home systems, giving providers a low-cost channel for customer relations and an ability to automatically manage non-payment.

It also canvassed establishment of an off-grid innovation and development fund – a highly visible development and innovation fund can play an important part in spurring off-grid growth in each country; and have a high-level energy access champion that can drive results, to cut through bottlenecks and monitor results.